Canada: Trade surplus expected to narrow modestly to $700 mln in February – BMO CM

Benjamin Reitzes, Senior Economist at BMO Capital Markets, suggests that Canada’s trade surplus is expected to narrow modestly to $700 mln in February.

Key Quotes

“The Canadian dollar averaged its strongest level since June 2015 in the month, suggesting some softness in exports and a mixed picture for imports. Our call would mark the fourth straight monthly surplus, which would be the best streak since oil prices collapsed in 2014. Oil prices ticked modestly higher in February (in C$ terms), though natural gas continued to pull back after surging in December.”

“One import category to watch is electronic & electrical equipment volumes, which has a strong correlation with machinery and equipment investment and suggests the twoyear slump in investment could be coming to an end. We’ll be watching non-energy export volumes closely as usual, as they’ve failed to gain traction over the past two years. After adding significantly to Q4 GDP, we’re expecting a modestly negative impact on Q1 growth.”